CPA Exam FAR Questions | Bad Debt Expense & Allowance for Doubtful Account. Intermediate Accounting

In this video, I will discuss CPA exam FAR questions. CPA exam FAR is one of the four parts of the CPA questions. CPA candidates need tp practice and understand CPA exam FAR questions before sitting for the CPA exam.
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An allowance for doubtful accounts is considered a “contra asset,” because it reduces the amount of an asset, in this case the accounts receivable. The allowance, sometimes called a bad debt reserve, represents management’s estimate of the amount of accounts receivable that will not be paid by customers. If actual experience differs, then management adjusts its estimation methodology to bring the reserve more into alignment with actual results.
In accrual-basis accounting, recording the allowance for doubtful accounts at the same time as the sale improves the accuracy of financial reports. The projected bad debt expense is properly matched against the related sale, thereby providing a more accurate view of revenue and expenses for a specific period of time. In addition, this accounting process prevents the large swings in operating results when uncollectible accounts are written off directly as bad debt expenses.
Units should consider using an allowance for doubtful accounts when they are regularly providing goods or services “on credit” and have experience with the collectability of those accounts. The following entry should be done in accordance with your revenue and reporting cycles (recording the expense in the same reporting period as the revenue is earned), but at a minimum, annually.

[@rayreyes8497]

Love your lectures. I am already a CPA but come to your lectures for refreshers. Thanks.

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[@dbuck2772]

Hi Professor Farhat, Thank You for all of the very helpful videos. I just wanted to point out that when you put back the $2000 at the 14:11 mark in the video, it should have gone on the credit side to increase the allowance (ADA) account. I have 2 more semesters of college before I get my bachelor's in accounting degree. After that I plan studying with your website before attempting the CPA exam.

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thank you for precious information

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[@anuv4807]

Great Lectures Sir! God Bless You!

[@SurooTheDiscipl]

Very useful. Thanks a lot

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Greate lecture

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✌️👍

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[@gageg8172]

Hey Mr. Professor Farhat what pathway is this on your website? Also Thank you so much for the goverment accounting section, I feel way more confident when I listen and practice with your lectures

[@AccountingLectures]

Hi Gage, please take a look at my intermediate accounting courses unless you are studying for the CPA exam. I will post both links. Intermediate accounting: farhatlectures.pathwright.com/library/by/category/intermediate-accounting/ CPA exam FAR: farhatlectures.pathwright.com/library/by/category/cpa-exam-far/

[@gageg8172]

@@AccountingLectures thank you professor, and yes I am studying for the cpa exam. I appreciate all the help, I am using becker and they just don't got into much detail about government accounting at all.

[@RoshanKumar-mp4wg]

Hello, I have one question could you please help me to understand that what will be the accounting entry in the books of debtor who didn't paid the bill to creditor for the services or goods received?

[@nazninabdikadir1396]

Thank you so much

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[@username100037]

If you underestimate the ADA, will the debit value not be expensed in the current year?